Iron ore prices fell for the fifth consecutive session to 760 CNY per ton.
Pressure from weakening steel demand in China and a recovery in raw material supply has caused iron ore prices to record their longest losing streak in recent times.
Iron ore prices continued their downward trend on June 9th, marking the fifth consecutive day of declines. The main reason identified is weakening seasonal steel demand in China, while the supply of raw materials for production is beginning to improve.
Price movements in key markets
At the Dalian Commodity Exchange (DCE), the September iron ore contract closed down 0.2% at 760 CNY/tonne. This is near its lowest level in the past two months. Conversely, on the Singapore Exchange, the benchmark July iron ore contract saw a slight recovery, remaining at 100.7 USD/tonne.
According to market experts, although iron ore arrivals at Chinese ports continue to grow, the actual volume used by steel mills has decreased. This indicates a clear slowdown in demand.
Pressure from the automotive and real estate sectors.
Weak steel demand is not only due to seasonal factors but also directly impacted by the stagnation of downstream consuming industries. Notably, the latest data shows that China's car sales in May fell sharply by 22.3% year-on-year to 1.53 million vehicles. This marks the eighth consecutive month of decline for the industry.
With the real estate market showing no significant signs of recovery, the manufacturing sector remains the largest consumer of steel in China. However, the weakening automotive industry is putting further pressure on short-term steel consumption prospects.
Raw material supply and steel market fluctuations
Besides iron ore, the prices of coking coal and coke also recorded a sharp decline. This change occurred as many coal mines in Shanxi province began operating again after a temporary shutdown for safety inspections. As of June 8th, more than half of the mines that were suspended after the serious incident in May had resumed production, contributing to the loosening of raw material supply.
In the finished steel market, most products traded on the Shanghai Futures Exchange recorded declines:
- Rebar:Decreased by 0.19%
- Hot-rolled steel coils:Decreased by 0.59%
- Stainless steel:A decrease of 1.09%
- Steel wire:A slight increase of 0.15%
Overall, profit margins for steel mills are shrinking significantly, forcing them to be more cautious about importing raw materials, which in turn continues to put downward pressure on global iron ore prices.
